5 minute read

Selling Your Printing Business: Key Factors to Consider When Setting an Asking Price

When the time comes to sell your printing business, the most vital part of the equation that can determine how quickly the business sells (or if it sells at all) is setting the right asking price.

According to reports from BizBuySell's Insight Report, businesses are selling within 6% of the asking price. When your business is priced correctly, you can save time and help facilitate the sale.

It is extremely important that your selling price accurately reflects a fair value of your print shop and properly aligns with your financial performance as well as current market conditions. Enlisting the help of industry experts with business for sale experience is the best way to evaluate your business and arrive at the appropriate asking price.

Financial Performance

It goes without saying that the financial performance of your business is pivotal in determining the right asking price when you list your business for sale. What some sellers don’t realize at first is that buyers will want to take a close look at your financial performance both right now and from the past two or three years. For the buyer, it’s about what your business has done lately, not 20 or 10 or even five years ago.

Buyers are attracted to profitability. How much a buyer pays for your business will mostly be determined by the current financial performance.

Buyers will be looking at the following metrics:

Financial performance now + past two or three years
What are your lease and loan obligations?
Are your overhead and inventory in line with industry standards?
Is your printing business properly equipped for the output you produce?
Who makes up your staff? Are they valuable employees?
Is your business transferable? Will the buyer be able to make a smooth transition after the sale?

Ultimately, the above items, along with your cash flow + owner’s compensation, will help you set the right price to attract potential buyers.

Market Conditions

The current market conditions at the time of the sale can play a role. You need to understand the current market, including economic conditions, competition, and industry trends; what better way to gain insight than to partner with experienced professionals in the printing industry?

Interest rates also play a role in setting the selling price. It’s important to keep in mind that buyers will take into consideration the rates on loans when formulating an offer for your business. Therefore, interest rates and financing options available to the buyers are factors in finalizing the sale of your printing business. Keep in mind that buyers are looking for a business that can provide them with enough income to take a salary plus pay back a loan.

Assets & Equipment

Often, how attractive your business is to a buyer comes down to transferability. How easily can it be transferred to a new owner and what obligations will they be taking over? This includes lease and loan obligations, inventory and overhead, having a properly equipped business, staff, and, of course, your client base.

If your business is properly equipped, then profitability should fall in line with industry standards. A business that is over-equipped or over-staffed typically does not add value, as increased loans, leases, and/or maintenance costs are going to hurt profitability.

Comparative Sales

One key factor that tends to be overlooked by sellers is comparable sales. By consulting with a skilled business broker or industry expert, you gain insights into the value of your business. They consider factors such as comparable financial performance, market conditions, and both tangible and intangible assets of similar businesses that have recently sold. By evaluating how similar businesses have been valued and sold, you will be able to set a realistic asking price that aligns with industry/market trends as well as recent business for sale transactions.

Internet & Information Factor

Here are the biggest key factors to consider as you look to find the ‘sweet spot’ that will attract buyers and help you sell your printing business:

Buyers are more educated and informed than ever before. Because of the Internet, potential buyers have significantly more information than what they’ve had in the past. Buyers can easily see what businesses are selling for both locally and around the country.
If your business is not priced correctly, knowledgeable buyers will take notice. The more accurate your price, the more likely you will be able to attract buyers and sell your business. Of course, you want to make sure your business isn’t undervalued, but you also need to make sure it isn’t overvalued either.
Setting the right price saves time. Because businesses tend to typically sell within 6% of the asking price, you can attract potential buyers and save time in negotiations when you set the right price for your business. Keep in mind that if you do not set the correct price, you risk not being able to sell the business because buyers are easily able to compare similar businesses for sale.

Conclusion

At the end of the day, buyers are looking for a business that is easily transferable and ultimately puts money in their pockets. Transferability means that the business has an established client base, accurate records of financial performance, and is properly equipped and staffed, among other items.

When you partner with a team of industry and business professionals to sell your printing business, you’ll be able to get a full evaluation of your business that analyzes all of these key factors and helps you set the precise asking price that can help potential buyers not think twice about buying your business.